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JTC launches cluster hub for niche semicon firms

Thursday, January 15, 2015 - 05:50
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JTC Corporation is building industrial space ahead of demand to avoid a repeat of the problem during 2010-2013, when supply lagged demand and led rents to spike about 20 per cent per year, CEO Png Cheong Boon told media on Wednesday on the sidelines of the launch of JTC nanoSpace@Tampines.

Singapore

JTC Corporation is building industrial space ahead of demand to avoid a repeat of the problem during 2010-2013, when supply lagged demand and led rents to spike about 20 per cent per year, CEO Png Cheong Boon told media on Wednesday on the sidelines of the launch of JTC nanoSpace@Tampines.

This is the state industrial landlord's 11th "innovative space" to date, which targets niche semiconductor firms.Facilities launched earlier catered to clusters including aerospace, biomedical and chemical. INFOGRAPHIC: Innovative spaces

Hot demand for smart sensors, device miniaturisation and energy-efficient devices, spurred by the Internet of Things, increasingly requires the expertise of companies in advanced packaging, compound semiconductors and micro-electro-mechanical systems, JTC said.

To be successful, these companies need to invest heavily in research and development as the focus is on high-mix products. And because the product life cycles are short, they need to bring them from lab to market quickly. They thus need to be able to set up their operations faster than the usual 11/2 to two years taken to set up a wafer fabrication plant.

JTC has thus worked with trade associations, industrialists and partner agencies to design this ready-built facility to enable companies to start up quickly, with the flexibility to customise their production and cleanroom space if they want.

The four-storey, multi-tenanted development also comes with vibration-controlled space. The shared common utilities such as bulk gases and chilled water will help lower companies' upfront capital costs by up to 20 per cent and operational costs by 10-15 per cent, JTC said.

The facility sits on a 1.31-hectare site in Tampines High Tech Park. Its total gross floor area of 22,700 square metres achieves a plot ratio of 1.7 - higher than that of a typical single-user semiconductor fabrication plant of 1.1. This intensified land use represents land savings of up to 30 per cent. The facility is expected to be completed in early 2017.

JTC has been developing a number of "innovative spaces" that aim to boost industries' productivity and competitiveness (see table). Mr Png told reporters that at least six more of such innovative spaces will be coming up. Of these, three - catering to logistics, furniture making and poultry processing - will be launched this year.

Describing the situation when industrial rents spiked from 2010 to 2013, he said: "Industrialists were all crying foul. Although during the same period the government had released more land, but that is land. Translating to space took another three years."

Some of that space supply started coming onstream last year, resulting in lower occupancy levels and, consequently, lower prices and rentals.

Market talk is that there will be a slight oversupply this year, but a moderation in prices and rentals is precisely what JTC is trying to achieve, Mr Png said.

The trickiness in building ahead of space is timing the space availability with industrialists' expansion or relocation plans, he added. And the challenge of developing such cluster hubs is understanding the diverse needs of manufacturers and, in some cases, getting them to be willing to tap shared services, as it may require some change in the companies' business models.

Occupancy level at JTC Surface Engineering Hub, the only completed cluster hub so far, stands at 30-odd per cent, after its opening last October. This is slow by some measure, but Mr Png said it is in line with JTC's projections. He is targeting for the facility to be half filled by this year.

"If you look at (the surface engineering companies') facilities, they have their own plating line and waste treatment, so the challenge is to get them to move. We know the take-up will not be very fast because they want to see how the facility is like and whether any guinea pigs will try them out first before they follow suit," he said.

Chia Siew Chuin, director of research & advisory at Colliers, said that while it is a good move to help industrialists reduce costs, the real estate facilities of semiconductor firms are very specifically calibrated for their uses, so JTC nanoSpace may only be suited for those whose operations are more generic and do not entail very specialised processes.

"It may suit some, it may not suit others. If some companies have special requirements that cannot fit into those premises, you can't force it," she said.

But Victor Mills, chief executive of the Singapore International Chamber of Commerce, lauded JTC's move to build such cluster hubs as "very forward looking, even aggressive", and believes that it will keep Singapore attractive as a hub from which one manages its production facilities in the region.